As utilities, independent power producers, and large corporates shift away from fossil fuels and toward renewable energy sources, energy storage is becoming a key piece of the renewable energy solution in the United States. Unlike fossil fuels where generators can control the amount of energy supplied and when it is supplied, solar and wind power are intermittent resources that produce energy only when the sun shines or when the wind blows. Energy storage is therefore critical not only to solve this intermittency challenge, but also to permit generators to respond rapidly to fluctuations in demand, thereby increasing grid resiliency and reducing the need for peaking plants to backstop such resources during periods of high electricity demand. As a result, energy storage will play a key role in the future of renewables development in the United States.
Like other forms of renewable resources, the cost of storage, and of batteries in particular, has declined sharply over recent years, driven by expanding manufacturing capabilities and an increase in the storage technology learning curve. This reduced cost has led to an increase in deployment of storage solutions. Battery storage, for example, has increased rapidly in recent years and appears poised for explosive future growth. While the United States currently has a little more than one GW of installed battery storage capacity, market predictors estimate that number could grow to more than seven GW of utility-scale and grid-connected battery storage by 2022. Indeed, Wood Mackenzie Power & Renewables' latest report on energy storage projects that energy storage deployments will grow thirteenfold over the next six years. Global Energy Storage Outlook 2019: 2018 Year in Review and Outlook to 2024. Within the United States, this growth will likely come in key markets such as California, although other states such as Hawaii, Arizona, Texas, Minnesota, and Colorado are also jumping on the energy storage train. Growth in storage projects will also be driven by utilities adopting storage as a capacity solution and as solar-plus-storage projects become increasingly more popular. Indeed, in February, Arizona's largest utility, Arizona Public Service ("APS"), announced plans to install an additional 850 megawatts of energy storage by 2025, the largest procurement by a U.S. utility thus far, in an effort to shift customer delivery of solar power into the evening, when it becomes more valuable for the grid—a solution that is both cleaner and cheaper than relying on natural gas peaker plants. However, a recent fire at an APS storage project, which resulted in the hospitalization of four firefighters, will be a key challenge for the storage industry to tackle as it charts its path forward.
In addition, policy support will open new markets for storage in 2019 and beyond. Federal Energy Regulatory Commission Order 841, unanimously approved in February 2018, which directs regional wholesale market operators to clarify how storage can participate in the markets based on its unique attributes, will be a key storage policy driver. Moreover, in May 2018, the Department of Energy's Advanced Research Projects Agency committed $30 million in funding for long-term energy storage innovation. Additionally, several states have passed legislation aimed at increasing energy storage or have announced energy storage targets or incentives. In New York, for example, Governor Cuomo recently announced $280 million in incentives for energy storage projects as a way to accelerate growth within the industry and drive down energy storage deployment costs. New York's goal is to lead the nation in energy storage deployment, with a target of 3,000 MW by 2030. This confluence of events bodes well for the future of storage in the United States and will likely result in more renewable resources coming online and a continued shift away from fossil fuels.